Posted on 03/09/2011 5:57:14 PM PST by Freedumb
If you think making purchases online means you don’t have to worry about paying the state sales tax, think again.
As the state continues to grapple with a big deficit the Illinois Department of Revenue this year has begun targeting those purchases on state tax forms and is seeking to collect.
This year, for the first time, taxpayers are being asked how much they owe in so-called “use taxes” on the Illinois 1040 tax form. The law already required taxpayers to pay the “use” tax, but it wasn’t listed on the basic form.
A use tax is a form of sales tax that applies to purchases made outside Illinois, but used in the state. The tax, which is 6.25 percent of the purchase price, applies to online purchases made from businesses that don’t have brick and mortar locations in the state and that don’t charge Illinois sales taxes, according to the Illinois Department of Revenue. That includes companies like Amazon.com, but not Barnes & Noble or Macy’s, who charge sales taxes online. The “use” tax also applies to catalog and home shopping network purchases from out-of-state companies that don’t charge sales taxes.
The state expects to collect $5 million to $6 million in such taxes this year, said department spokeswoman Susan Hofer.
For taxpayers who know how much they spent, the 1040 instruction forms include a worksheet to help calculate what is owed.
If you made such purchases but are clueless on how much you spent, the forms include a guide in estimating how much you owe, based on adjusted gross income. For individuals with income between $50,001 and $75,000, the state estimates that such purchases amounted to $608, and the estimated tax owed is $38. For those with incomes between $20,001 and $30,000, purchases are estimated at $240, and the tax owed is estimated at $15.
The state expects filers to honestly report what they owe. And if the state later finds out that you owe more, you can face penalties and interest, Hofer noted.
While the amounts aren’t much, the tax still “kind of hit people between the eyes because they didn’t expect it,” said Judi Strauss, an enrolled agent and owner of Strauss Tax Service with offices in Chicago and Downers Grove.
Taxpayers can’t leave Line 22 blank on the 1040 form, but they can put in zero if they don’t owe anything, she said.
Strauss advises consumers going forward to keep track of what they actually do buy from virtual stores online. “Look to see if the store charges sales tax,” when you check out, she said. “Keep a running total all year.”
The tax law is not new nor is it unique to Illinois, said Carol Kokinis-Graves, senior writer analyst with Riverwoods-based CCH, a provider of tax and audit services.
“In most states, the use tax was enacted at the same time the sales tax was enacted,” she said. “However many people are simply unaware of their use tax obligation and don’t pay it.”
Illinois is offering an amnesty program on the tax covering purchases made from July 1, 2004, through the end of last year.
The state isn’t alone in trying to collect. “Many states are experiencing severe budget crises,” Kokinis-Graves said. “As a result, they are aggressively looking for additional methods to collect taxes they are owed.”
On top of raising their income tax by 67%? What a state!!!!!!
Further, you do have the use tax. You are required by law to pay tax on purchases when the business does not collect the sales tax at the point of purchase.
That includes all internet sales. Texas calls this the "Occasional Use Tax". BTW, Your sales tax is 6.25%, plus you have local sales taxes.
And the "occasional use tax" isn't just for out-of-state purchases. If you live in part of Texas with a higher local sales tax, and buy something from another part of the state and they only collect the state sales tax, you are required to file the occasional use tax form to make up the difference. Texas Occasional Use Tax:
Furthermore, assume you live in Houston and buy an item for $200 from a seller in a part of Texas with no local taxes. The seller only charges state sales tax of $12.50, or 6.25 percent. Since the correct tax rate in Houston is 8.25 percent, you owe additional use tax of $4.00.Your state is one of the middle ones for filing annoyance -- you have to file only once a year, BUT it is supposed to be filed by January 20 of the following year. Virginia lets us wait until May 1st, when our income tax is due.
You probably didn't know that you have been breaking the law for all these years. But now that you know, I'm sure you'll do the right thing, as annoying as it is. Then you'll want to make sure everybody else does as well, because there's nothing as bad as paying your fair share of taxes knowing that other people are cheating and not paying.
Actually, I think you just pled yourself as a law-breaker, a tax cheat, and someone who thinks that other citizens of your state should have to pay for your free-loading.
Not much different than what conservatives usually attack liberals for.
“You probably didn’t know that you have been breaking the law for all these years...”
You must have me confused, I don’t buy stuff on the Internet.
Most conservatives aren't so adamant about being crooks, tax cheats, and free-loaders. I guess you just think your neighbor should have to pay your taxes for you.
Kansas Sale Tax and Compensating Use Tax:
Since 1937 Kansas has imposed a compensating use tax on goods and merchandise purchased from outside Kansas and used, stored or consumed in Kansas. Its purpose is to protect Kansas retailers from unfair competition from out-of-state retailers who sell goods tax-free by applying a tax on these items equal to the Kansas rate. It also helps to assure fairness to Kansans who purchase the same items in Kansas and pay the Kansas sales.If you don't like your state taxes, don't be like liberals and simply whine and refuse to go along with what the elected government decides; call your representative and ask them to change the law. Otherwise, you are just another tax cheat.Individuals and businesses buying items from retailers in other states may be subject to Kansas use tax on those purchases. The use tax applies to the total cost of the merchandise, including postage, shipping, handling or transportation charges. The use tax rate is the same as the combined state and local sales tax rate in effect where the buyer takes delivery in Kansas. For individuals, this is usually our home.
To pay the Kansas use tax on your untaxed out-of-state purchases made during calendar year 2010, refer to the instructions for line 18 of Form K-40 on page 10. You may either use the chart, or compute the tax due by applying the state and local tax rate in effect for your address to the total purchases subject to the tax."K-40" is of course your income tax form: Kansas Individual Income Tax Form
The Use Tax is on line 18. Thats a a little ways up from the signature, where you sign under penalty of perjury that you have accurately reported all taxes due.
If you are buying things out of state without paying tax, and saying you owe zero dollars in use taxes, and signing your tax form, you are lying under oath. I'm pretty sure most conservatives frown upon people lying and tax-cheating.
I’ve seen it before, and no, nobody has successfully used it, because it is not a valid argument.
Use Tax is not a tariff; it is the sales tax for when the tax isn’t collected by the business selling the item, so it’s the same tax a person owes whether they buy from inside or outside the state. That clearly is not a tariff, which would be a tax applied only to items purchased out-of-state.
Note that in many cases, sales tax is collected on out-of-state purchases; it’s only when you buy from companies with no business in your state that the business doesn’t collect the sales tax, and therefore you have to calculated it and pay it on your own.
I believe every state with sales tax includes sales tax on untaxed purchases, either on income tax forms, or separate forms that must be filed. Some annually, some quarterly, some monthly.
As more people buy from Amazon, states are realising how unfair it is to let so many people cheat on their taxes —it increases the tax burden on law-abiding citizens. So they are stepping up finally and cracking down on the tax cheats living off the hard work of their neighbors.
Still peddling your Shillery I see!
Use taxes on out of state purchases are unlawful extortion of a tax on interstate commerce.
Any other POV is pure socialist posturing.
And it is possible that you’ve never bought anything in part of the state with a lower sales tax than your local tax — but I bet you didn’t know that, if you did, you’d have to pay the use tax on the difference.
I probably did that. I’ve been out of state a lot, and obviously, eat out when traveling.
So you got me there.
Unless you can cite a single court case to back up your assertion, or even a nice law review article written by someone who actually knows something, your assertion is simply your unsupported opinion.
On my side, I have the knowledge that this tax has been implemented by 45 states, some since the 1930s, and nobody has EVER been able to successfully make the argument you insist is correct.
Of course, this is because your statement of the facts is incorrect — the use tax is NOT a tax on interstate commerce. It is part of the sales tax, which is a tax on the citizens of a state based on their ability to buy things, from WHATEVER source they buy them.
If you buy something out of state, and use it out of state, you won’t owe a tax. You owe a tax on things you buy that end up in your house. Makes no difference where they came from, and there is no difference between goods bought in and out of state, and therefore it is not a tax based on “interstate commerce”.
Relevant Constitutional quote: “No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports,”
Interesting oddity of the constitution in a similar circumstance: “The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”
In repealing the ban on alchohol, the amendment set up liquor as the one item that a state has absolute power to control as an import, and the federal government can’t do anything about it. So states can ban companies outside the state from importing alcohol, giving their local manufacturers a monopoly in the state.
And if a resident of a state drives alcohol over state lines in violation of a state law, they are commiting a “constitutional crime”. Note that the amendment doesn’t prohibit writing a LAW, it prohibits an ACTION, without limiting who is prohibited from that action. A rather sloppy wording.
Anyway, you should report your out-of-state purchases to your state, and refuse to pay, and see how that constitutional interpretation of yours works out.
I’m not a lawyer, but I believe that purchasing food for consumption while on travel would NOT be subject to the “use tax”, which is a tax on things that you use in your “home”, and not on things you “use” while away. So if you bought a tube of toothpaste and used it on a trip, it wouldn’t be subject to the use tax, but if you brought it home and used it, then it would.
I’m glad my state doesn’t have local sales taxes; our sales tax is somewhat low. I also like income taxes as part of the mix; it’s good to have different types of taxes, helps the state plan better for revenue. Our state has to balance it’s budget (we have a rainy-day fund to help out).
They must be joking. How many people hold onto their online receipts? No one is going to report those expenses and unless the state gets it from online retailers, good luck with collecting on the tax.
If you don’t live in Kansas don’t be to critical. The waste of tax dollars is just horrendous. I am tired of paying the freight to gift the freeloaders in this state. You know those folks who don’t have money to feed their kids but they have money to buy cigarettes and beer. I’m sick and tired of being the golden goose for them!
I may buy one or two books a year from an out of state vendor. How much do you think I'm cheating the state of? Maybe a couple of dollars? Your holier than thou facade is unbecoming!
Are you by any chance a tax guy for a state? We have those people here and it is the national pastime to flummox them and win!
LOL. Tax cheats? You mean like our Revolutionary Founders, those naughty smugglers!
This one is new. The bill targets Amazon and other big-name sites, by making them charge tax is they have any AFFILIATED SELLERS have a brick-and-mortar presence in the state.
Illinois' "use tax" was ruled unconstitutional back in the early 1990's and has never been resurrected. If they try hoodwinking the public, I'm fairly certain this will end up in court again ....
As for me I buy EVERYTHING except food and medication online to avoid the sales tax here in Illinois. Good luck collecting that Un-Constitutional "use tax" from me. Idiots.
Oh, but not on the tax you supposedly owe going back seven years (IOW the statute of limitations), but merely on penalties and interest. Which means these corrupt blood suckers have evry intention of collecting every dime applicable to the years and if you have no receipts, be no doubt happy to apply the standard .006 to your income gross covering those years, and bill you for it, whether you in fact owe that amount or not!
That is to say, putting any figure on line 22 is tantemount to an admission that you do in fact owe the tax, and very likely owe even more going back to 2004!
So, even if you think you're off the hook by handing over the demanded extortion by the most notoriously corrupt state in the union?
You do that? And you can expect to hear from them again about the previous six years.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.